Chapter 4: Role of Government in Business 2012-09-28 5:59 AM
• What are the 6 categories of government involvement with business?
• What are Crown corporations? Why were they created?
• What does privatization refer to? Can you cite any examples?
• What are 4 responsibilities of the federal government?
• What are responsibilities of the provincial governments?
• Why are there interprovincial trade barriers?
• How does the government manage the economy using fiscal policy?
• What is Canada’s national debt? Has it been increasing or decreasing in the last 6 years?
• Explain the purpose of the federal budget
• What does the term monetary policy mean? What organization is responsible for Canada’s
• Explain how governments in Canada spend tax dollars to help Canadians
• Give 2 examples of how government has provided financial aid to businesses
• What 2 groups benefit from equalization transfer payments?
• Why do federal and provincial governments tend to favor Canadian companies when
contracts are approved?
• How does the NRC contribute to technology advancement in Canada?
• List 4 organizations that aim to help exporters
Learning Objective #1: Understand the 6 categories of government activities that can affect
• There are 6 categories of government involvement in Canada
• What are the government activities that affect business?
o The 6 categories are Crown corporations, laws and regulations, taxation and
financial policies, government expenditures, purchasing policies, and services.
• What is the relationship between Canada’s economic system and government
o As noted in chapter 2, Canada has mixed economy, which is an economic system
in which some allocation of resources is made by the market and some by the
government. As a result of the constitution act, the different levels of government
(federal, provincial and municipal) have responsibilities and jurisdiction over
certain maters of the economy and population
Learning Objective #2: trace the historical role of government in the Canadian economy and
understand why Crown corporations were created
• The Canadian government played a key role from the beginning of the country in 1867 in
protecting young manufacturing industries and getting the railroad built to the west coast,
helping to bind the country together
• Why did the government have to do what it did?
o It had the legal power and responsibility to do so, as a result of the Constitution
Act. The US threatened to overwhelm our industry, which was not strong enough
by itself to resist or to build the railway
• Why were Crown corporations necessary?
o Companies were not willing or able to assume certain responsibilities or fill some
needs in the marketplace. The CNR, Air Canada, Hydro Quebec and Atomic Energy
of Canada Ltd. Are some important examples (however CNR a nd Air Canada are
no longer Crown corporations).
• What is the recent trend with Crown corporations?
o In recent years, we have seen an increasing trend where governments (both
federal and provincial) have been selling Crown corporations. This is called
privatization. Some examples include the sale of remaining Petro -Canada shares
and BC Rail Ltd. Learning Objective #3: discuss why understanding laws and regulations